<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1997
----------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-23600
MOVIEFONE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3757816
-------- ----------
(State or other jurisdic- (I.R.S. Employer
tion of incorporation or Identification No.)
organization)
335 MADISON AVENUE, NEW YORK, NEW YORK 10017
--------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 212-450-8000
------------
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
------ -------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
CLASS OUTSTANDING AT NOVEMBER 12, 1997
----- --------------------------------
<S> <C>
Common stock, Class A par value $.01 per share 5,662,135
Common stock, Class B par value $.01 per share 7,155,053
</TABLE>
<PAGE>
MOVIEFONE, INC.
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
PART I FINANCIAL INFORMATION:
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Operations 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-11
PART II OTHER INFORMATION:*
Item 6. Exhibits and Reports on Form 8-K 12
</TABLE>
* Item numbers which are inapplicable or to which the answer is negative have
been omitted.
2
<PAGE>
MOVIEFONE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
----- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,723,801 $ 3,560,007
Short-term investments, at amortized cost - 3,003,839
Trade accounts receivable 2,509,290 3,213,869
Prepaid expenses and other current assets 527,537 305,674
Inventory 313,598 103,923
Due from related parties 44,299 -
------------- -------------
Total current assets 5,118,525 10,187,312
PROPERTY AND EQUIPMENT 5,819,858 5,402,602
ACCUMULATED DEPRECIATION (4,316,368) (3,629,074)
------------- -------------
PROPERTY AND EQUIPMENT, net 1,503,490 1,773,528
LONG-TERM INVESTMENTS, at fair value in 1997 and 12,139,361 11,685,777
at amortized cost in 1996
DUE FROM OFFICER 8,636 16,663
OTHER ASSETS 145,993 292,709
------------- -------------
TOTAL ASSETS $ 18,916,005 $ 23,955,989
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Due to related parties $ - $ 79,860
Accounts payable 1,624,320 2,026,610
Accrued expenses and other current liabilities 2,126,164 2,157,527
-------------- -------------
Total current liabilities 3,750,484 4,263,997
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred Stock, par value $.01 per share;
5,000,000 shares authorized, no shares issued
Common Stock, par value $.01 per share; 30,000,000 shares authorized;
5,662,135 and 5,650,947 shares in 1997 and 1996, respectively, of Class
A Common Stock issued and outstanding; 7,155,053 shares of Class B
Common Stock issued and outstanding in 1997 and 1996. 128,172 128,060
Additional paid-in capital 34,316,355 34,279,267
Unrealized holding gain on investments 90,180 -
Accumulated deficit (17,149,186) (14,715,335)
-------------- --------------
17,385,521 19,691,992
Less: Treasury Stock, 400,000 shares, at cost (2,220,000) -
-------------- --------------
Total stockholders' equity 15,165,521 19,691,992
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 18,916,005 $ 23,955,989
============== ==============
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
MOVIEFONE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
-------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUE
Advertising revenue $2,166,448 $2,091,835 $6,337,427 $5,236,217
Sponsorship revenue 1,323,217 1,097,225 3,926,996 3,204,793
Ticket service fees, net 768,125 679,397 2,866,023 1,856,241
Other revenue 340,462 102,710 841,353 329,579
-------------- -------------- -------------- ---------------
Total revenue 4,598,252 3,971,167 13,971,799 10,626,830
-------------- -------------- -------------- ---------------
COST OF SERVICES
Advertising commissions 167,588 218,167 548,351 434,916
Ticket sales servicing and
transaction fees 176,003 169,957 667,769 538,110
Telecommunications 298,135 286,423 895,696 804,776
Other expenses 97,116 49,765 226,539 209,549
-------------- -------------- -------------- ---------------
Total cost of services 738,842 724,312 2,338,355 1,987,351
-------------- -------------- -------------- ---------------
GROSS PROFIT 3,859,410 3,246,855 11,633,444 8,639,479
OTHER COSTS AND EXPENSES
Selling, general and
administrative 2,660,476 1,448,512 6,678,057 4,680,625
Advertising and promotions 1,597,080 1,323,386 4,721,869 3,834,645
Legal expenses 350,000 429,907 2,773,500 1,452,486
Depreciation and amortization 239,977 251,358 687,294 738,505
Interest income (257,766) (271,687) (793,425) (818,386)
-------------- -------------- -------------- ---------------
Total other costs and expenses 4,589,767 3,181,476 14,067,295 9,887,875
-------------- -------------- -------------- ---------------
(Loss) Income Before Income Taxes (730,357) 65,379 (2,433,851) (1,248,396)
Income Taxes - - - -
-------------- -------------- -------------- ---------------
NET (LOSS) INCOME ($730,357) $65,379 ($2,433,851) ($1,248,396)
============== ============== ============== ===============
NET (LOSS) INCOME PER COMMON AND
COMMON EQUIVALENT SHARE ($0.06) $0.01 ($0.19) ($0.10)
============== ============== ============== ===============
AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES
OUTSTANDING 12,786,227 12,899,697 12,801,840 12,800,416
============== ============== ============== ===============
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
MOVIEFONE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1997 1996
----------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(2,433,851) $(1,248,396)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 687,294 738,505
Amortization of premium/discount on investment securities 37,319 94,968
Barter services received 3,694,814 2,987,165
Barter services provided (3,694,814) (2,987,165)
Net changes in assets and liabilities (130,028) (67,322)
------------ ------------
Net cash used in operating activities (1,839,266) (482,245)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investment securities (4,414,638) (2,768,644)
Sales/maturities of investment securities 7,017,754 4,000,000
Purchases of property and equipment (417,256) (258,747)
------------ ------------
Net cash provided by investing activities 2,185,860 972,609
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 37,200 24,000
Purchase of treasury stock (2,220,000) -
------------ ------------
Net cash (used in) provided by financing activities (2,182,800) 24,000
------------ ------------
Net (decrease) increase in cash and cash equivalents (1,836,206) 514,364
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,560,007 839,337
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,723,801 $ 1,353,701
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
MOVIEFONE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------
1. In the opinion of management the accompanying unaudited interim
financial statements reflect all adjustments consisting only of a
normal and recurring nature necessary to fairly present the financial
position of MovieFone, Inc (the "Company") and subsidiaries as of
September 30, 1997, and the results of their operations and their
cash flows for the three and nine month periods ended September 30,
1997 and 1996. These interim condensed consolidated financial
statements should be read in conjunction with the consolidated
financial statements and notes to the consolidated financial
statements contained in the Company's annual report on Form 10-K for
the year ended December 31, 1996. The results of operations for the
nine month period ended September 30, 1997 are not necessarily
indicative of financial results on an annual basis.
2. On October 26, 1994 the Company was sued by PCC Management, Inc.
("PCC") in the Superior Court of the State of California in an action
entitled PCC Management, Inc. v. MovieFone, Inc. et al. (the
"California Action") for alleged breach of contract, fraud and
interference with contractual relations, inducement of breach of
contract, misappropriation of proprietary information, false
advertising and unfair competition. The action alleged that the
Company breached the terms of an agreement (the "Agreement") with
PCC's predecessor, Pacer/CATS Corporation ("Pacer/CATS"), to provide
teleticketing services. The action sought injunctive and declaratory
relief and compensatory and punitive damages in an unspecified
amount. On November 1, 1994, in response to PCC's California Action
and pursuant to an arbitration clause in the Agreement, the Company
filed a Demand for Arbitration ("Demand") with the American
Arbitration Association ("AAA") against Pacer/CATS in an action
entitled PromoFone, Inc. et al. v. Pacer/CATS Corporation. The Demand
alleged that Pacer/CATS has failed to perform its obligations under
the Agreement and promoted the services of Ticketmaster Corp.
("Ticketmaster"), the Company's main competitor. The Demand sought
injunctive relief and damages in an unspecified amount.
On November 22, 1994, after Pacer/CATS failed to answer the Demand,
the Company moved by Order to Show Cause in the Supreme Court of the
State of New York, New York County in an action entitled PromoFone,
Inc. et al. v. PCC Management, Inc., to compel arbitration and
restrain PCC from pursuing its California Action. On January 27,
1995, the court ordered arbitration before the AAA of all disputes
and enjoined PCC from prosecuting any action or proceeding related to
the Agreement. On April 4, 1995, PCC filed a motion asking the
Supreme Court to reconsider its ruling. On April 27, 1995, the
Supreme Court denied PCC's motion. PCC subsequently appealed this
order and filed a motion seeking a stay of arbitration pending
appeal. This motion was denied. On February 8, 1996, the appellate
division denied PCC's appeal of the Supreme Court's January 27, 1995
order. On February 5, 1997, PCC voluntarily dismissed the California
Action.
6
<PAGE>
On July 6, 1995 the Company was sued by Pacer/CATS/CCS - a Wembley
Ticketmaster Joint Venture ("JV") in the Supreme Court of the State
of New York in an action entitled Pacer/CATS/CCS - a Wembley
Ticketmaster Joint Venture v. MovieFone, Inc., Promofone, Inc., and
The Teleticketing Company, LP (the "New York Action") alleging that
the Agreement between the Company and Pacer/CATS is void or voidable,
or, in the alternative, the Agreement does not bind the JV and seeks
damages from the Company for alleged tortious conduct. On August 17,
1995, the Supreme Court stayed the New York Action pending resolution
of the arbitration between the Company and PCC. The Court found that
the two actions were "intertwined". Pacer/CATS/CCS appealed that
decision. On April 2, 1996, the appellate division denied
Pacer/CATS/CCS's appeal of the Supreme Court's August 17, 1995
decision.
Evidentiary hearings in the arbitration began September 30, 1996 and
concluded on April 11, 1997. Final briefs were filed during May and
June and closing arguments in the arbitration were heard on June 10,
1997. On July 23, 1997, a unanimous panel of three arbitrators
awarded the Company $22,751,250 in monetary damages against
Pacer/CATS. The panel also awarded the Company certain injunctive
relief against Pacer/CATS, its successors and assigns, and all
persons or entities acting in concert with them. On July 24, 1997,
the Company filed a petition in the Supreme Court of the State of New
York to confirm the arbitration award. On October 27, 1997,
Pacer/CATS submitted its opposition to the petition to confirm the
arbitration award. The Company submitted its reply to the opposition
on November 7, 1997.
On March 17, 1995, the Company filed an action against Ticketmaster
in the U.S. District Court for the Southern District of New York,
alleging that Ticketmaster violated the federal antitrust laws and
the common laws of New York. In particular, the Company alleged that
Ticketmaster violated the Sherman Act by entering into unlawful
exclusive-dealing contracts, by making unlawful acquisitions, and by
engaging in other exclusionary conduct including the acquisition of
PCC. The Company also alleges that Ticketmaster tortiously interfered
with the Company's contract with PCC, tortiously interfered with the
Company's prospective business relationships, otherwise interfered
with business relationships of the Company, misappropriated the
Company's trade secrets, breached the contractual obligations it
assumed as an affiliate of PCC, and engaged in unfair competition. On
May 9, 1995, Ticketmaster filed a motion to dismiss. The Company
filed opposition to this motion on June 27, 1995. Oral argument on
Ticketmaster's motion was held in late September 1995. The court took
the motion under submission. To date, no decision has been rendered.
On March 4, 1997, the Company filed an amended complaint against
Ticketmaster, adding a federal claim of racketeering and additional
antitrust and tort claims. On April 17, 1997, Ticketmaster filed a
motion to dismiss all federal claims in the amended complaint. On
August 15, 1997, the Company submitted its opposition to the motion
to dismiss. Ticketmaster's reply to the opposition is currently due
on November 13, 1997.
On January 31, 1996, Ticketmaster-New York, Inc. and Ticketmaster
Corporation filed a summons and complaint against the Company and
others in the Supreme Court of the State of
7
<PAGE>
New York, New York County, for defamation as a result of alleged
misstatements regarding the U.S. Department of Justice's
investigation of Ticketmaster. On September 9, 1996, the Supreme
Court granted the Company's motion to dismiss the suit in its
entirety. On October 10, 1996, Ticketmaster filed a notice of appeal.
The nine-month deadline for Ticketmaster to perfect its appeal
expired on July 10, 1997.
On January 24, 1997, the Company filed an action against Sir Brian
Wolfson (the "Wolfson Action"), a former director of PCC, in the
Supreme Court of the State of New York, alleging that Sir Brian
Wolfson breached his fiduciary duties to the Company by causing the
assets of PCC to be fraudulently transferred so as to render PCC an
insolvent shell corporation incapable of performing its contractual
obligations to the Company. The Company sought damages in excess of
$7 million. On February 10, 1997, Sir Brian Wolfson removed the
action to the U.S. District Court for the Southern District of New
York. On February 28, 1997, Sir Brian Wolfson filed an answer to the
complaint. On June 23, 1997, the Company voluntarily dismissed the
Wolfson Action without prejudice.
3. The Financial Accounting Standards Board recently issued Statement of
Financial Accounting Standards No. 128 "Earnings Per Share", the
adoption of which will be effective for the Company's fiscal year
ending December 31, 1997. The Company believes that the new method of
calculating basic earnings per share will not result in amounts
materially different from the currently reported primary earnings per
share amounts.
4. During the quarter ended September 30, 1997, the Company's
investments have been reclassified from held-to-maturity to
available-for-sale in accordance with Statement of Financial
Accounting Standards No. 115 "Accounting for Certain Investments in
Debt and Equity Securities". Accordingly, at September 30, 1997,
investments are reported at fair value with unrealized holding gains
and losses reported in a separate component of stockholders' equity.
Investments were previously accounted for at amortized cost.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
------------------------------------------------------------
and Results of Operations
-------------------------
RESULTS OF OPERATIONS
- ---------------------
Three Months Ended September 30, 1997 vs. Three Months Ended September 30, 1996
Third quarter total revenue increased 16% from $3.97 million in 1996 to $4.60
million in 1997. Advertising revenue increased 4% from $2.09 million in 1996
to $2.17 million in 1997. The increase in advertising revenue was primarily
the result of the additional revenue stream from the Company's new advertising
product called "Previews". The number of calls and the average rate per call
sold increased, while the percentage of calls on which the Company sold
advertising time decreased from 84% in the third quarter of 1996 to 70% in the
third quarter of 1997. Sponsorship revenue increased 20% from $1.10 million in
1996 to $1.32 million in 1997 primarily due to increased barter services
provided. Ticket service fees increased 13% from $.68 million in the third
quarter of 1996 to $.77 million in the third quarter of 1997. The increase in
ticket service fees is primarily due to an increase in the number of tickets
sold. Other revenue increased 240% from $.10 million in 1996 to $.34 million
in 1997. Other revenue is comprised of revenue earned from the Company's
emerging business units, consisting primarily of sales of the Company's Mars
theater management system.
Total cost of services increased 3% from $.72 million to $.74 million from the
third quarter of 1996 to the third quarter of 1997. These costs increased
primarily due to the increase in other expenses, which consists mainly of the
cost of sales of the Company's Mars theater management system.
Third quarter gross profit increased 19% from $3.25 million in 1996 to $3.86
million in 1997.
Total other costs and expenses increased 44% from $3.18 million to $4.59
million from the third quarter of 1996 to the third quarter of 1997. These
expenses increased primarily as a result of the Company's increased personnel
expenses associated with hiring of additional staff in many areas of the
Company's business.
The third quarter net loss in 1997 is $.73 million ($.06 per share) compared
to the third quarter net income in 1996 of $.07 million ($.01 per share).
The number of calls received by the Company's MovieFone service increased 17%
from 15.5 million in the third quarter of 1996 to 18.1 million in the third
quarter of 1997. The Company believes that the growth in its calls received
was the result of an increase in domestic movie theater attendance, an
increased awareness in established markets, and the addition of new markets
and theaters.
The number of tickets sold by the Company's MovieFone service increased 11%
from .56 million in the third quarter of 1996 to .62 million in the third
quarter of 1997. The Company believes that the growth in its ticket sales are
primarily due to an increase in domestic movie theater attendance, and the
addition of new ticketing markets and theaters.
9
<PAGE>
No new markets were added during the third quarter of 1997. The Company's
total number of markets is 30.
Nine Months Ended September 30, 1997 vs. Nine Months Ended September 30, 1996
Total revenue increased 31% from $10.63 million in the first nine months of
1996 to $13.97 million in the first nine months of 1997. Advertising revenue
increased 21% from $5.24 million in the first nine months of 1996 to $6.34
million in the first nine months of 1997. The increase in advertising revenue
was the result of the increased number of calls received by the Company's
MovieFone service and an increase in the average advertising rate per call
sold, as well as the addition of the Company's new advertising product called
"Previews". The percentage of calls on which the Company sold advertising time
decreased from 86% in the first nine months of 1996 to 70% in the first nine
months of 1997. Sponsorship revenue increased 23% from $3.20 million in 1996
to $3.93 million in 1997 primarily due to increased barter services provided.
Ticket service fees increased 54% from $1.86 million in the first nine months
of 1996 to $2.87 million in the first nine months of 1997. The increase in
ticket service fees is primarily due to an increase in the number of tickets
sold. Other revenue increased 154% from $.33 million in the first nine months
of 1996 to $.84 million in the first nine months of 1997. Other revenue is
comprised of revenue earned from the Company's emerging business units,
consisting primarily of sales of the Company's Mars theater management system.
Total cost of services increased 18% from $1.99 million to $2.34 million from
the first nine months of 1996 to the first nine months of 1997. These costs
increased as a result of the corresponding increases in all components of
total revenue.
Gross profit increased 35% from $8.64 million in the first nine months of 1996
to $11.63 million in the first nine months of 1997.
Total other costs and expenses increased 42% from $9.89 million to $14.07
million from the first nine months of 1996 to the first nine months of 1997.
These expenses increased primarily as a result of the Company's increased
legal expenses, increased personnel expenses associated with hiring of
additional staff in many areas of the Company's business, and increased
advertising and promotions expenses primarily due to increased barter services
received. The increase in legal expenses relates primarily to the Company's
arbitration proceeding with Pacer/CATS, with which the Company has an
agreement related to certain of the Company's teleticketing activities. (See
Note 2 to the Company's condensed consolidated financial statements.)
Net loss increased 94% from $1.25 million ($.10 per share) in the first nine
months of 1996 to $2.43 million ($.19 per share) in the first nine months of
1997.
The number of calls received by the Company's MovieFone service increased 21%
from 42.4 million in the first nine months of 1996 to 51.3 million in the
first nine months of 1997. The Company
10
<PAGE>
believes that the growth in its calls received was the result of a general
increase in movie theater attendance, increased awareness in established
markets, and the addition of new markets and theaters.
The number of tickets sold through MovieFone increased 39% from 1.66 million
in the first nine months of 1996 to 2.31 million in the first nine months of
1997. The Company believes that the growth in its ticket sales are to some
extent driven by the release of "hit" movies, since moviegoers attending these
movies are more likely to buy tickets in advance using the Company's service
in order to avoid being sold-out from these movies. There were more of these
"hit" movies in the first nine months of 1997 than in the first nine months of
1996, which contributed to the increase in the Company's ticket sales.
The Company added two new markets during the first nine months of 1997 (San
Antonio and Nashville) bringing its total number of markets to 30.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's primary capital requirements are to maintain its operations, to
fund the investment required to establish MovieFone in additional markets and
teleticketing at additional theaters, and to develop new businesses.
The Company's cash balance decreased 52% from $3.56 million at December 31,
1996 to $1.72 million at September 30, 1997, primarily due to the use of cash
for operating activities.
From the nine months ended September 30, 1996 to the nine months ended
September 30, 1997, net cash used in operating activities increased 283% from
$.48 million to $1.84 million. This increased use of cash is mainly due to the
increased net loss for the nine months ended September 30, 1997.
During the nine months ended September 30, 1997, the Company purchased 400,000
shares of treasury stock at a cost of $2.22 million.
The Company does not have any significant outstanding commitments for capital
expenditures, but intends to incur such expenditures for expansion of its core
businesses and development of its new businesses.
11
<PAGE>
PART II OTHER INFORMATION:
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) There were no reports on Form 8-K filed for the twelve weeks
ended September 30, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MOVIEFONE, INC.
(Registrant)
Date: /s/ ADAM H. SLUTSKY
-------------------
November 12, 1997 Adam H. Slutsky, Chief Financial
Officer and Chief Operating Officer
(Duly authorized signatory)
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from MovieFone,
Inc.'s condensed consolidated financial statements as of and for the nine months
ended September 30, 1997 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,723,801
<SECURITIES> 0
<RECEIVABLES> 2,509,290
<ALLOWANCES> 0
<INVENTORY> 313,598
<CURRENT-ASSETS> 5,118,525
<PP&E> 5,819,858
<DEPRECIATION> 4,316,368
<TOTAL-ASSETS> 18,916,005
<CURRENT-LIABILITIES> 3,750,484
<BONDS> 0
0
0
<COMMON> 128,172
<OTHER-SE> 15,165,521
<TOTAL-LIABILITY-AND-EQUITY> 18,916,005
<SALES> 185,372
<TOTAL-REVENUES> 13,971,799
<CGS> 169,293
<TOTAL-COSTS> 2,338,355
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,433,851)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,433,851)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,433,851)
<EPS-PRIMARY> (.19)
<EPS-DILUTED> 0
</TABLE>
